It is the Central Bank of India
Established on 1 April 1934
under the RESERVE BANK OF
It started functioning from April
Its headquarters are in Mumbai
(Maharashtra) since 1937.
Its present governor is Duvvuri
It has 22 regional offices, most
of them are in State capitals
It has 26 offices in which four
are regional offices located in
3. Brief History
It was set up on the recommendations of the
Hilton Young Commission
It was started as share-holders bank with a paid
up capital of 5 crores.
Initially it was located in Kolkata. It moved to
Mumbai in 1937.
Initially it was privately owned. The govt. had a
nominal value of shares of INR 2,20,000. Later
on in 1949, the bank was nationalised and is fully
owned by the Govt. of India.
Since nationalization in 1949, the Reserve Bank
is fully owned by the Government of India.
4. Its First governor was Sir Osborne A. Smith April
1, 1935 to June 30, 1937
The first Indian Governor was “Sir Chintaman
D.Deshmukh” (August 11, 1943 to June 30, 1949)
On June 27, 2006, the Union Government of
India reconstituted the Central Board of Directors
of the Reserve Bank of India (RBI) with 13
members, including Azim Premji and Kumar
Sir Osborne A. Smith
April 1, 1935 to June 30, 1937
Sir Chintaman D.Deshmukh
August 11, 1943 to June 30, 1949
The Preamble of the Reserve Bank of India describes the
basic objectives of the Reserve Bank as
"...to regulate the issue of Bank Notes and keeping of
reserves with a view to securing monetary stability in
India and generally to operate the currency and
credit system of the country to its advantage."
The preamble prescribes the objectives as:
to secure monetary stability within the country
To operate the currency and credit system to the
advantage of the country.
9. Central Board (1 of 2)
The board is appointed by the Government of
India as per the Reserve Bank of India Act.
Appointed/nominated for a period of four years
The functions of the central board are general
superintendence and direction of the bank’s
10. Local Board
There are four Local Board
One each for the four regions of the country in
Mumbai, Calcutta, Chennai and New Delhi
Appointed by the Central Government For a term of
Functions : To advise the Central Board on local
matters and to represent territorial and economic
interests of local cooperative and indigenous
To perform such other functions as delegated by
Central Board from time to time.
12. Roles of RBI
Regulator & Supervisor of Financial System
Banker to the government
Manager of Foreign Exchange
Issuer of Currency
Banker to the banks
14. Quantitative Measures
BANK RATE also called discount rate also includes
OPEN MARKET OPERATIONS buying and selling
of government securities.
VARIABLE RESERVE RATIO it includes C.R.R
15. Repo Rate
Whenever the banks have any shortage of funds they can
borrow it from the central bank. Repo rate is the rate at
which our banks borrow currency from the central bank.
A reduction in the repo rate will help banks to get Money at
a cheaper rate.
When the repo rate increases borrowing from the central
bank becomes more expensive.
In order to increse the liquidity in the market, the central
bank does it.
The present repo rate is 8%
16. Bank Rate
It’s the interest rate that is charged by a country’s central
bank on loans and advances to control money supply in the
economy and the banking sector.
This is typically done on a quarterly basis to control inflation
and stabilize the country’s exchange rates.
A fluctuation in bank rates Triggers a Ripple-Effect as it
impacts every sector of a country’s economy.
A change in bank rates affects customers as it influences
Prime Interest Rates for personal loans.
The present bank rate is 9%
17. Reverse Repo Rate
the rate at which the banks park surplus
funds with reserve bank.
While the Repo rate is the rate at which the
banks borrow from the central bank.
It is mostly done , when there is surplus
liquidity in the market by the central bank.
The present reverse repo rate is 7%
18. Regulate & Supervise the
Objective: To Maintain Public confidence in the
system, protect depositor’s interest & provide
cost effective banking services to the public.
What R.B.I does…..
Prescribes broad parameters of banking
operations within which the country's banking
and financial system functions.
The Reserve Bank of India performs this
function under the guidance of the Board for
Financial Supervision (BFS).
Lender of last resort
19. Banker to the Government
Keeping the cash balances of the Government as
deposits free of interest.
Receiving and making payments on behalf of the
Carrying out the Govts’ exchange remittances and
other banking operations.
Helping both Central and State Govts float new
loans and mange public debt.
Making ways and means advances to the state
and local authorities.
Acting as advisor to the Govt. on all monetary and
20. Manager of Foreign
Exchange facilitate external
payment and promote orderly development
and maintenance of foreign exchange market
What R.B.I does…..
It acts as a custodian and Manages the
Foreign Exchange Management Act, 1999.
RBI buys and sells foreign currency to
maintain the exchange rate of Indian Rupee
foreign currencies like the US
Dollar, Euro, Pound sterling and Japanese
21. Issue of Currency
Objective: To ensure adequate quantity of
supplies of currency notes and coins of good
What R.B.I does…..
Issues new currency and destroys currency and
coins not fit for circulation.
It has to keep in forms of gold and foreign
securities as per statutory rules against notes &
22. Banker to banks
• Maintains banking accounts of all scheduled
• RBI also regulates the opening /installation
of ATM Fresh currency notes for ATMs are
supplied by RBI.
• RBI regulates the opening of branches by
• It ensures that all the N.B.F.S follow the
Know Your Customer guidelines.
23. Developmental Role
Objective : To develop the quality of banking
system in India.
What R.B.I does……
Performs a wide range of promotional
functions to support national objectives.
To establish financial institutions of national
importance, for e.g:
25. Functions (contd.)
2. Banker to Govt.:
Agent of all Central & State Govt.
Obligations to transact Govt.
Acts as advisor in Govt. & Public
Issue of debt instruments like
26. Functions (contd.)
3. Banker’s bank & Lender of the last resort:
According to the Banking Companies Act 1949, every
scheduled bank was required to maintain the Reserve Bank
a cash reserve at the rates prescribed by RBI from time to
Controls the liquidity in the banking system
Lends to the bank as a refinancing function in case of
4. Controller of credit:
Volume of credit through open market transactions/reducing
Permission of opening a new branch
Weekly return of details
Power to inspect the accounts of any commercial banks
27. Functions (contd.)
Powers of RBI:
1) Holds the cash
reserves for all
Controls the credit
operations of bank
through quantitative &
Controls the banking
To provide rediscount
and refinance facilities
to scheduled banks
28. Functions (contd.)
5. Custodian of foreign exchange
Maintains official rate of
exchange by intervening
market operations which can
be active or passive
Monitoring the movement of
exchange rates with the help of
Real Effective Exchange
Replacement of FERA with
29. Functions (contd.)
6. Regulatory & Supervisory
To prevent risk, avoid
financial crises, protect
depositors’ interest & reduce
asymmetry of information
between depositors and
Concept of risk mgt. system
Asset liability management
30. Subsidiaries of RBI
Fully owned: National Housing Bank(NHB),
Deposit Insurance and Credit Guarantee
Corporation of India(DICGC), Bharatiya
Reserve Bank Note Mudran Private
Majority stake: National Bank for Agriculture
and Rural Development (NABARD)
The Reserve Bank of India has recently
divested its stake in State Bank of India to
the Government of India.
31. Current News about RBI
RBI has penalized 6 more banks for
KYC violation. These banks are
Allahabad Bank, Bank of
Maharashtra, Corporation Bank, Dena
Bank, IDBI Bank and Indian Bank.
Reverse repo rate: 6.25%
GDP Growth forecast:5.5%